Natural gas surged above $9 per million British thermal units (MMBtu) Wednesday, hitting the highest level in more than a decade as dwindling inventories push prices higher.

U.S. prices surged more than 6% at one point to hit a high of $9.399 per MMBtu, the highest since August 2008. The move is the latest leg higher in what’s been a blistering rally for natural gas as Russia’s war on Ukraine sends energy markets reeling.

David Givens, head of natural gas and power services for North America at Argus Media, pointed to three key catalysts fueling the rally: little production growth, high liquified natural gas exports and storage levels that are roughly 17% below the five-year average.

Rapidly rising prices are adding to inflationary pressures across the economy. Drivers are already grappling with record high prices at the gas pump, and now utility bills are set to increase too. While utility companies might have once switched to coal as a cheaper alternative, coal-fueled power is also now in short supply with a number of plants going offline due in part to ESG concerns.

(Source: CNBC, published May 25 2022 at 11:02 a.m. by Pippa Stevens)